BRICS Leaders Discuss Economic Autonomy and Currency Trade, Facing Challenges in De-Dollarization
- BRICS leaders signal intent to boost trade in local currencies and reduce dependence on the US dollar.
- While aiming for economic autonomy, experts highlight hurdles such as distrust among member states and lack of adequate financial infrastructure.
- The bloc’s intra-trade currently represents only 5% of global trade, with varied priorities among member nations complicating de-dollarization efforts.
During a recent summit, BRICS leaders emphasized the importance of leveraging the economic strength of the Global South and advocated for increasing trade in local currencies, aiming to decrease reliance on the US dollar. The bloc’s motivations stem from evolving geopolitical tensions, economic sanctions, and US tariff policies.
Despite these ambitions, experts voiced skepticism regarding the BRICS’ capacity to shift away from the dollar. The process referred to as “de-dollarization” arises when confidence in the US economy is diminished, with many global transactions currently conducted in dollars, particularly in significant commodities like oil and gold.
According to data from the Bank of International Settlements, the dollar constituted 89% of the forex market as of April, a slight increase from the previous year, while the euro and yen accounted for 29% and 17%, respectively.
In his speech at the summit, South African President Cyril Ramaphosa highlighted the necessity for BRICS to collectively advance the use of local currencies and enhance financial connectivity across borders. Energy-rich members like Iran and Russia called for the establishment of payment and settlement systems within BRICS to facilitate these aims.
Iranian President Masoud Pezeshkian noted that the current financial framework is susceptible to political disruptions due to its reliance on a limited number of currencies, indicating a pressing need for diversification away from the dollar.
Experts pointed out key barriers for the BRICS, including insufficient financial and economic integration, substantial trade imbalances, and significant distrust between influential members like China and India. Jayant Krishna, a senior fellow at the Center for Strategic and International Studies, remarked that BRICS lacks the necessary institutional and macroeconomic structure to rival the dollar’s inherent liquidity and trust.
Initial Steps Toward De-Dollarization
The discussion around de-dollarization is predominantly centered within BRICS nations. Former US President Donald Trump previously threatened the bloc with tariffs should they deviate from the dollar, stating, “We require a commitment from these countries that they will neither create a new BRICS currency nor support any other currency to replace the mighty U.S. dollar.”
As of 2024, the collective output of 10 BRICS countries represented 27% of global output, 24% of merchandise exports, and 22% of foreign direct investment inflows, according to a United Nations Trade and Development report. However, intra-BRICS trade only constituted approximately 5% of world trade, reflecting limited progress despite the potential flagged in the report.
Despite discussions about enhancing commerce through national currencies, tangible advancements remain elusive. The 2026 BRICS declaration did not specify a common currency or comprehensive strategies for trade settlements, instead designating the BRICS Payment Task Force to focus on practical solutions for cross-border payments.
While Russia and China reportedly settle about 90% of their bilateral trade in rubles and yuan, this shift has largely been driven by US sanctions imposed post-2022 rather than a coordinated effort among BRICS nations. Furthermore, many BRICS currencies lack robust markets outside their domestic economies, which inhibits their acceptance in international trade, keeping dollar invoicing dominant.
Geopolitical Rivalry Complicates Unity
The rivalry between India and China is cited as a major impediment to the BRICS bloc’s cohesion. Both nations seek greater independence from the US; however, they are also direct competitors across various domains including manufacturing and technology.
As trade relationships evolve, India’s trade deficit with China has surged to a record $112.16 billion, complicating the dynamics within BRICS. In contrast, India’s goods and services trade with the US reached roughly $239 billion in 2025, highlighting its complex international trade landscape.
Experts underscore the differing priorities among BRICS members as a complicating factor for de-dollarization. While Russia and Iran aim to minimize dollar exposure due to sanctions, China seeks to enhance renminbi’s global usage under its capital controls, and India advocates for the rupee. Ultimately, the existing alternative mechanisms within BRICS fall short in matching the liquidity and global acceptance of the US dollar.
News Courtesy of CNBC
